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How Americans are Responding to Growing Health Costs

Since 1998, health care benefits costs have risen at more than twice the rate of inflation. This peaked in 2002. Since 2004, health care costs have increased each year by 6.1% and in 2008, this is expected to slow slightly to a 5.7% increase, though still be at double the inflation rate.

A survey of 1,000 people 21 and older responded to a survey about their health care habits this past November. They were asked questions about how growing trends in health care are affecting their lives, and how they are responding to those challenges and opportunities.

More than 6 in 10 of those with health insurance said they saw an increase in their health plans’ out-of-pocket costs in the past year. For these 63%, increasing costs have caused the following changes in behavior (compared with responses to similar questions from a couple years ago):

Behavior Change 2005 2007 Good or Bad?
1 Try to take better care of themselves 71% 81% good
2 Talk to the doctor more carefully about treatment options and costs 57% 66% good
3 Go to the doctor only for more serious conditions or symptoms 54% 64% bad
4 Delay going to the doctor 40% 50% bad
5 Switch to over-the-counter drugs 33% 42% unclear – not all OTC drugs are equivalent to prescription forms
6 Look for cheaper health insurance 28% 29% unclear – cheaper coverage is typically worse coverage
7 Look for less expensive health care providers 27% 33% unclear – no clear data on how doctor fees relate to quality; constantly switching doctors can lead to bad continuity of care
8 Not fill or skip doses of their prescribed medications* 21% 28% bad
*There is also evidence that high prescription costs are leading people to shop for cheaper medicines from international sources on the Internet. U.S. drug prices are as much as 50% higher than in Canada, Western Europe and Japan, where drug prices are capped. The impact of having 47 million people without insurance and millions more without prescription benefits mean that those who do get sick often cannot afford the cost of getting well. Meanwhile, online pharmacies are not regulated to the extent that the bricks-and-mortar pharmacies are.

Interestingly, the 3 most common activities – trying to be more healthy, talking to doctors to reduce costs, going to the doctor less – are those that critics of universal health care say will fix the problem. These critics tend to blame greedy and ignorant patients for rising health costs:

  • “people’s health coverage insulates them from rising costs so they go to the doctor (and wind up having expensive tests) for the slightest aches and pains”
  • “people simply aren’t taking enough responsibility for their own health habits and are instead using the medical system when they should just be eating better and exercising more.”

This survey shows that these critics are wrong on both accounts. Not only are most insured Americans (and certainly those without any coverage) aware of rising health costs but they’re already changing their health habits accordingly. (See rows #1 and #2.)

Still, to some this survey is the proof in the pudding that Health Savings Accounts and other Consumer-Directed Health Plans will work: making people pay more when they need care by enrolling them in these plans makes them more cost-conscious and less likely to spend on health care.

  • But as this and other studies show, making people hesitant to go to the doctor because it’s expensive means they will avoid all but the most urgently needed care – they will cut down on preventive care – which raises long-term health costs.
  • HSA’s and CDHP’s are the Wall Street health benefit of choice as they shift health care costs from employers to employees. Indeed employees’ monthly premiums can be much lower, but should they ever need care – watch out! The costs of treatment will still be high; cost shifting is not the same as cost saving, and now these enrollees have huge deductibles to pay off before the coverage kicks in.
  • Enrolling those who view themselves as young, healthy and lucky and not likely in need of care, in HSA’s and CDHP’s means that those stuck in the group and individual insurance pools are more likely to have regular health care needs. The costs of covering them will increase as there are less people to spread the risk among.

People are already aware of costs. And now the downsides of increased patient costs that reformers have warned about – people avoiding needed health care and medicines (rows #3, #4 and #8) and taking risks in order to save a buck (rows #3 to #8) – also seem to be on the rise.

The survey was conducted by the Employee Benefit Research Institute, a nonprofit, nonpartisan research group in Washington, and research firm Mathew Greenwald & Associates.

This article was written by Emily Cleath.

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